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Ukraine's industrial output will grow annual 8%, Makukha says

Growth in Ukraine's industrial output will accelerate to an annual 8% through 2011, helped by increased production in the machinery, food and consumer goods industries, Economy Minister Volodymyr Makukha said.

Higher output will spur economic growth and trigger increased demand for domestic goods and services, Makukha said today at a press conference in Kiev. „Exports make up a huge part of our economy, so the economy depends very much on global market risks,” said Makukha. „Our main goal for the next couple of years is to change the economic structure by developing services and the domestic market.” Industrial output grew 6.2% in 2006 as steel and machinery makers benefited from rising demand worldwide. That helped economic growth accelerate to a 7% pace last year compared with an initial government forecast of 2.5%. The steel and chemicals industries will boost output, Makukha said. Steel and chemicals products make up more than 50% of the nation's exports.

The government wants to attract $4 billion of foreign investment a year by creating „a favorable business climate, winning membership in the WTO and setting up a free trade zone with the European Union,” Makukha said. The country will join the WTO in July at the latest, he said. The country also wants to win Middle East markets by selling airplanes and machinery production there, Makukha said. „We need investments to make our goods competitive and spur consumption,” Makukha said. „Today, we consume imports which cause trade and current-account deficits.” The trade deficit widened to $5.2 billion in the first 11 months of 2006, according to the state statistics committee. The current-account deficit surged to $321 million in the first nine months of last year. The government also plans to cut annual consumer-price growth to 5% by 2011, Makukha said. The inflation rate will fall to 7.5% this year from 11.6% a year ago, he said. Personal income will rise 8% a year in the next five years, compared with 19% in 2006, Makukha said. (Bloomberg)